Nordic grids call for extra investment to handle wind power boost by 2040

OSLO (Reuters) - Nordic national power grids need extra investment from 2030-2040 to deal with a rise in renewable energy output in the region’s north, the grid operators of Norway, Sweden, Finland and Denmark said in a report on Thursday.

This investment, however, is insufficient to handle the long-term changes to the region’s electricity system, as more capacity is needed to transport power from the north.

Generation capacity in the south, where most of the region’s demand comes from, is set to decline as nuclear power plants and fossil fuel thermal units are phased out.

“The phased-out production capacity is located in the southern part of the system whereas a significant share of the wind power replacing it will be located in the more northern parts,” the grid operators said in the report.

Power will have to flow over longer distances as a result, causing congestion in the transmission grid, and will make power prices lower in the northern part, they said.

In contrast, prices in southern parts will be higher and more closely linked to continental prices.

“The analyses made for this plan indicate a long-term need and the socioeconomic benefit of both maintaining and expanding the interconnector capacity within the Nordic system,” the report said.

The operators did not detail what the new grid could cost.

The Nordic power market is expected to be much more volatile than it is at present, due to a higher share of wind and solar.

“By 2040, up to 20% of all hours will have close-to-zero prices and, on the other hand, the number of hours with extremely high prices will also increase,” they said.

Norway and Sweden will remain net power exporters by 2040, the grid operators concluded; Finland, which imports currently about a quarter of its electricity needs, is however expected continue to need imports, but at a reduced level as it will increase its nuclear power production capacity.